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Christian Parenti is a correspondent for The Nation and writes for several other publications. His latest article appears in the February 4th edition of Fortune magazine. It’s called “Chocolate’s Bittersweet Economy.”

On Valentine’s Day, we look at one luxury industry that has come to expect huge profits on this hyper-consumerized occasion: chocolate. A scathing new report by veteran journalist and author Christian Parenti says hardly any progress has been made in the cocoa industry’s pledges to address child labor. We host a debate between Parenti and William Guyton, president of the World Cocoa Foundation. [includes rush transcript]

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Christian Parenti is a correspondent for The Nation and writes for several other publications. His latest article appears in the February 4th edition of Fortune magazine. It’s called “Chocolate’s Bittersweet Economy.”

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This is a rush transcript. Copy may not be in its final form.

JUANGONZALEZ: Today is Valentine’s Day. Yes, it’s a time for love, chocolate, flowers, candlelight dinners and diamonds. But it’s also noted for hyper-consumerism. The National Retail Federation expects total spending across the country today to top $17 billion. Today, we look a little deeper into chocolates and diamonds, two of the main luxury industries that have come to expect huge profits on Valentine’s Day.

Now, what’s not to love about chocolate or diamonds, particularly those that have been certified “conflict-free” by the international Kimberly process? We’ll let our guests give you some details.

We’ll start by looking at the chocolate industry. Over 70 percent of the world’s cocoa comes West Africa, and 40 percent comes from just one country, the Ivory Coast, where child labor is still widespread. Seven years ago, chocolate companies agreed to abide by a voluntary protocol to abolish child labor. But a scathing new report by veteran journalist and author Christian Parenti says hardly any progress has been made.

AMYGOODMAN: Christian Parenti is a correspondent for The Nation magazine and writes for several other publications. His latest article appears in the February 4th edition of Fortune magazine. It’s called “Chocolate’s Bittersweet Economy.”

Christian Parenti joins us here in our firehouse studio. We’re also joined in Washington, D.C. by William Guyton. He’s the president of the World Cocoa Foundation.

We welcome you both to Democracy Now! Christian, we’ll begin with you. Tell us what you found. When did you go to the Ivory Coast?

CHRISTIANPARENTI: I went to the Ivory Coast in October with a photographer, Jessica Dimmock, and we went to investigate conditions in the cocoa industry, because for seven years there has been an international protocol called the Harkin-Engel protocol. Seven years ago, there was an attempt to pass real legislation that would regulate the chocolate industry. The chocolate industry pushed back and instead created this voluntary protocol, the Harkin-Engel protocol, which sets out to eliminate the worst forms of child labor in West Africa. So 70 percent of all cocoa, the raw ingredient for chocolate, comes from West Africa, and 40 percent of the world supply comes from one country, Ivory Coast. So we went to the Ivory Coast to essentially fact-check the claims of the chocolate industry, to see if they had made changes. And what we found was that there had been no substantive changes. There were still many children working, using pesticides, machetes, carrying heavy loads during school, unable to attend school, being injured due to their labor.

And the way the Harkin-Engel protocol works — I should say that actually the first deadline for the Harkin-Engel protocol to achieve real change in the chocolate industry, which is to say to eliminate child labor, was 2005. They missed that deadline, so they were given an extension by Harkin and Engel ’til July 2008. The chocolate industry works through an NGO that it established called the International Cocoa Initiative. They claim that tens of millions of dollars have been spent throughout West Africa to eliminate child labor. What we found in the Ivory Coast was that the International Cocoa Initiative has one employee, who shares an office in the basement of a law firm, and that the many claims of collaboration with local NGOs and development projects did not pan out. They were unable to show us anything. The only thing that they could show us was an orphanage where most of the kids were actually not from the cocoa sector and where the head of the orphanage said that there had been about eight kids over the last several years staying for between three and four months who had been in the cocoa sector. So it seemed that the Harkin-Engel protocol was doing nothing, and what we found in the countryside were farmers working very hard and their children working hard next to them.

The way the cocoa industry is structured —-

JUANGONZALEZ: Before you go on, I would like to bring in William Guyton, president of the World Cocoa Foundation. Your response to whether the Harkin-Engel protocol and the industry’s self-policing is working?

WILLIAMGUYTON: Well, first of all, I’d like to wish everyone good morning and happy Valentine’s Day. This is Bill Guyton speaking. And before I get started on talking about the protocol and progress that’s been made, I just wanted to spend just a minute or two talking about the context of cocoa farming.

There are about five million small-scale cocoa farmers around the world that produce this important crop. And about two million or more are found in West Africa. And as you both have mentioned, about 70 percent of the crop comes from West Africa. And Ivory Coast, or Cote d’Ivoire, is the most important producer with about 40 percent of the supply. Most of the farms in West Africa are small-scale family farms with five acres or less of land holdings, and they’re located in very remote areas of the countryside. Cocoa only grows about twenty degrees north or south of the Equator, so it’s a very tropical crop. It grows in association with other tree crops. It’s a shade-loving tree. One of the major problems that we have in cocoa is that there are high losses from diseases and pests. About a third of the crop is lost each year to disease and pest problems. Another problem, as the Fortune article magazine pointed out, was the fact that there are difficulties with infrastructure, roads and access to education and health.

And just reading through the article, we certainly agree with many of the findings of the Fortune article report. First of all, that farmer incomes are important, we couldn’t agree more on that. And our approach at the World Cocoa Foundation is to help work with farmers to improve farming techniques so that farmers can get a better yield or become more productive than they have been in the past. And we also encourage farmer organizations to form. So we do have programs on the ground, specifically on farmer outreach, improving incomes, looking at improving environmental conditions, as well as social issues, which is the main topic of the discussion today. And that includes child labor and general labor on the farm, as well as health issues, such as HIV/AIDS and malaria prevention.

JUANGONZALEZ: Mr. Guyton, on the issue of whether you had met the goals of the Harkin-Engel protocols, why had they not been met, or what are the problems with that?

WILLIAMGUYTON: Well, the Harkin-Engel protocol is something that has never been attempted before in any agricultural sector or any sector to speak of. What we’re looking at doing is trying to improve conditions across two million small-scale farms in West Africa and to do this in a way that surveys are conducted in the field, through partnerships with the public sector and the private sector, as well as experts in labor. And these surveys have already been carried out in both Ivory Coast and Ghana and publicly reported by both of those governments. And those reports are posted on select websites for people to view.

AMYGOODMAN: Let me bring Christian Parenti in to respond to that.

CHRISTIANPARENTI: This is -— you know, the key fact here is that the chocolate industry is controlled — the cocoa industry is controlled by large corporations at the ports that set the price. If the chocolate industry wanted to improve conditions by raising prices, the Harkin-Engel protocol would have attempted to set prices, and they have not done that.

What he’s talking about — education, this and that — when we went out and looked and saw what was happening, there was usually nothing. And the one thing we did find was this education attempt. Really, what that translates as for the average farmer is an intimidation campaign. You go out into the countryside, you talk to them about the Harkin-Engel protocol, most people know nothing, but they will tell you, “Well, the police have told us that if we’re caught using our children in the fields, then maybe there will be a boycott of our chocolate and we’ll starve.” But all of this stuff about education, this high-minded rhetoric does not pan out on the ground.

And what you have is a very corrupt government in Cote d’Ivoire, considered to be one of the most corrupt in the world by Transparency International, that works hand-in-glove with corporations like Cargill, ADM, that sell cocoa to the international market and make enormous profits. Cargill made $2.3 billion profit last year, and they control a huge part of the trade.

One of the things we found were there’s cocoa cooperatives that farmers are attempting to form themselves so that they can get better prices, so they can have some leverage against the chocolate industry. Cargill and other firms have, one, illegally entered the interior to set up their own warehouses, where they buy from small farmers. This is against the law in Ivory Coast, but as one person said, the illegal is normal in Ivory Coast.

The other thing that they’ve done is they’re lending money to co-ops, which are attempting — small groups — groups of small farmers banding together to become their own middle men. They lend money to these farmers, then they — when they receive cocoa from them, they claim that the cocoa is not of sufficient quality and they don’t pay them enough. The farmers fall into debt. And in several cases, we found examples of co-op members who had been illegally arrested. In this one case, on orders of Cargill, Cargill bribed police, port police, to drive into the interior and to seize these farmers, put them in jail until the rest of the co-op members could collect enough money to pay the debt. So this is — one, it’s about getting money, but it’s also about breaking the co-ops that might oppose — that might compete against the chocolate industry.

And, I mean, the fact of the matter is, the Harkin-Engel protocol has done nothing substantive, and they’re hoping that this deadline will pass with, you know, not too much bad publicity.

JUANGONZALEZ: Mr. Guyton, what about the issue that if you did raise the price you pay the farmers, the small farmers wouldn’t need to employ child labor and others at the lowest-possible wages to be able to produce your product?

WILLIAMGUYTON: Well, I’d just like to turn back again to the fact that these small-scale farms are family farms. And what we find that children are working with their parents on the farm. These are not workers that are hired from other places. They’re children working with their parents on the farms. And I’d just like to turn back again to some of the programs we have on the ground. We have a regional program —-

CHRISTIANPARENTI: You can’t hide behind the fact that they’re small family farmers. You completely control -— the industry controls the market in Cote d’Ivoire. No one can sell without going through one of the large corporations that are members of the international chocolate organizations. And if you really wanted to improve conditions for farmers, there would be an agreement to raise prices by ten or twenty percent, and what that would mean would be that large firms like Cargill and ADM and those who buy from them, like Hershey and Nestle, would have to pay more money and would make less profits. It’s that simple.

And they don’t want to do that, because they’re in the business of making money. They’re not in the business of developing Cote d’Ivoire and keeping children out of poverty. That is fundamentally not what they’re about. And it’s very simple, what could happen. They could agree to regulations of their industry that would translate into price controls for farmers, and they don’t want to do that. And so, they will do everything except that, because what they are about is fundamentally making as much money as they possibly can off of the people of Cote d’Ivoire. And if that forces independent farmers to take their children out of school, as happened again and again, and exploit them and work them, so be it.

JUANGONZALEZ: William Guyton?

WILLIAMGUYTON: Well, I’d like just to explain — I started to talk about the programs that we have on the ground —-

CHRISTIANPARENTI: Your programs do not pan out. When I went to fact-check, I didn’t find any. Tulane University has been contracted by the US government to investigate this. Tulane’s report came out about a month ago. It found that you had no standards for your protocol. It found that you had made no progress on the ground. You have no case, really, to say that you’re trying.

AMYGOODMAN: Bill Guyton?

WILLIAMGUYTON: I disagree with that. And I wanted to talk about the programs that we have on the ground. One of the ones that we’re most proud of is the Sustainable Tree Crops Program, which is a program that was put into place in 2002. And to date it’s reached over 55,000 small-scale cocoa farmers in West Africa. And what we’ve seen as a result of these programs is that farmers that have graduated are experiencing income improvements of anywhere between 25 to 50 percent, so additional income for farmers. And we’re seeing also that they are following better social practices, such as labor conditions. They also learn about HIV/AIDS and malaria prevention. The results are directly from the farmers themselves. I was in Cote d’Ivoire in September and had a chance to talk with many farmers along the way that were involved in this program.

CHRISTIANPARENTI: Why did Tulane not find the same things? Why does Tulane University not find the same things that you claim? Why did I not find -— why did no journalist find this?

WILLIAMGUYTON: I read the Tulane report, and they talked very favorably about the Sustainable Tree Crops Program, which we’re pleased to support. And I would be happy to go with you to visit them.

CHRISTIANPARENTI: No, the Tulane University report says you have no standards that you’re trying to meet, and it also says conditions on the ground have not changed. That’s the fundamental fact in the Tulane report.

WILLIAMGUYTON: The Tulane report, which we all can read, is very complimentary of what the program has done on the ground. It has reached many farmers, and we’ve seen improvements in incomes, as well as social and environmental conditions for those who have graduated. We also have educational programs on the ground. We just launched a new educational program with the US Agency for International Development, as well as some NGO partners, to look at youth leadership programs and formal and non-formal education in both Ghana and Cote d’Ivoire. Those programs are pretty —-

JUANGONZALEZ: Mr. Guyton, if I can, I’d just like to get back to the issue I raised here before about the issue of price. In a world where the buyers essentially are controlling the price that they pay for a product, does the industry see any need to raise prices to assure that the way that the product is produced is not only produced as profit for the industry but also provides decent living standards for those who produce it?

WILLIAMGUYTON: Well, the world market price is determined on the global scale on commodity exchanges in New York and in London. And what we’re seeing today is that the commodity -— for cocoa, the commodity prices are favorable, at about $2,500 per metric ton. So there has been an increase recently, and that’s from a variety of different factors. We do —-

CHRISTIANPARENTI: That doesn’t get passed on to the farmers, though.

WILLIAMGUYTON: We’re seeing that, from country to country, you do see some substantial differences. In Asia, for example, you see that the Indonesian farmers capture about 80 percent of the world market price. In some West African countries, it’s seventy, seventy-five. In others, it’s lower. So it does vary from country to country.

CHRISTIANPARENTI: You know, Mr. Guyton, with all due respect, this really sounds like dissembling. The fact of the matter is, 40 percent of world cocoa is produced in Cote d’Ivoire. The international cocoa firms control the ports, they control the market there. It would not be hard at all to have higher prices. In fact, until 1991 -— I mean, until 1999, there was a structure for ensuring minimum prices for farmers, and US firms lobbied hard to eliminate that. And due to a debt crisis, that was eliminated. And since then, prices have gone through the floor.

Now, whatever the price in London is is one thing. What matters to the farmers in Cote d’Ivoire is what the price is at San Pedro, or, more to the point, what the farm gate price is. And unless you guys make an effort to pay higher prices, that’s not going to happen. And we have to be realistic: they don’t want that to happen. And that’s why —-

WILLIAMGUYTON: Well -—

CHRISTIANPARENTI: You know, this constantly referring also — there needs to be some accountability. You can’t just consistently say, oh, we partner with these NGOs, we partner with these NGOs. What NGOs? The only NGO that your one — the International Cocoa Initiative’s single employee in Ivory Coast would send me to was Mesad, an orphanage, where the head of the orphanage said only a handful of children from the cocoa sector had been there. This is hardly an education program for farmers. This is hardly some sort of social welfare program. I mean, there’s nothing that you can point to, but yet you continually just roll out these claims that you’re partnering with this group, you’re partnering with that group. And usually you don’t even mention the groups.

WILLIAMGUYTON: I’ll mention the groups right now, because apparently you didn’t meet with them when you were there. We partner with the US Agency for International Development, and the program, the Sustainable Tree Crops Program, is being implemented by the International Institute of Tropical Agriculture. It’s an organization with headquarters for this program in Accra, Ghana. In each of the countries, we have —

CHRISTIANPARENTI: These are irrelevant facts. I met with the main development bodies there. I called USAID. What you describe does not obtain on the ground in Cote d’Ivoire. What happens in Cote d’Ivoire is, there was a war in 2002 to 2004. It’s one of the most corrupt governments in the world. Farmers live at the end of beat-up dirt roads. To get their cocoa out, they have to pass through checkpoints of armed men who tax them. And the large cocoa companies do nothing to redevelop the roads, like pave roads or build schools. They make no effort to redistribute wealth. And that’s the fundamental fact.

AMYGOODMAN: We’re going to have to leave it there, but after break, we are going to talk a little about Fair Trade chocolate. I want to thank Christian Parenti, joining us, correspondent for The Nation. His piece on chocolate, “Chocolate’s Bittersweet Economy,” appears on the cover of Fortune magazine with photographs by Jessica Dimmock. And we are showing those photographs, which people can see online at democracynow.org. Bill Guyton has been with us in Washington, president of the World Cocoa Foundation. Today is Valentine’s Day. We’re talking chocolate and diamonds.

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